M/S Progressive Food Products ... vs Sarswat Co-Operative Bank Ltd., ...
2017 Latest Caselaw 2126 Bom

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              IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
                        NAGPUR BENCH, NAGPUR.

                          WRIT PETITION NO. 5987 OF 2015


1. M/s Progressive Food Products Pvt.
     Ltd., having its registered Office at 
     12, East High Court Road, Ramdas-
     peth, Nagpur.

2. Rajendraprasad Sardarilal Agrawal,
     aged about 78 years, present occ.
     Nil, Director of Petitioner No.1, R/o
     Dharampeth, Zenda Chowk, Nagpur.

3. Smt. Renu w/o Sudhir Agrawal,
     aged about 51 years, Occupation
     Household, director of Petition No.1,
     R/o Zenda Chowk, Dharampeth,
     Nagpur.

4. Smt. Kusum w/o Rajendraprasad
     Agrawal, aged about 72 years, Occ.
     Household, R/o. Zenda Chowk,
     Dharampeth, Nagpur.                                       ... PETITIONERS


                                        VERSUS


Saraswat Co-operative Bank Ltd.,
through its Brnch Manager and 
Authorised Officer, having its Branch
office at Agrasen Chowk, Nagpur.                             ... RESPONDENT


                                             ....

Shri R.P. Joshi, Advocate for the petitioners.
Shri M.D. Samel, Advocate for the respondent.

                                             ....




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                                        CORAM : PRASANNA B.VARALE, J.

DATE OF RESERVING THE JUDGMENT  : 25TH OCTOBER, 2016.

DATE OF PRONOUNCING THE JUDGMENT : 03RD MAY, 2017.


JUDGMENT : 

By way of present petition, the petitioners are challenging the

judgment and award passed by the learned Judge, Cooperative Court,

Nagpur in Dispute No. 414 of 1996 dated 18.02.2013 and the judgment and

award passed by the learned Member, Maharashtra State Cooperative

Appellate Court, Bombay, Bench at Nagpur in Appeal No. 13 of 2013 dated

07.09.2015.

2. The brief facts, which give rise to the filing of the present

petition, can be summarized as under :-

The petitioner No.1 is the company and petitioner Nos.2 and 3

are the directors of the said company. The petitioner/company indulged

in production of the fruit products. It is the case of the respondent/

Saraswat Cooperative Bank Limited (hereinafter referred to as "The bank"

for the sake of brevity) that the petitioner/company sought financial

assistance from the erstwhile bank namely Nagpur Urban Cooperative

Bank Limited. As the petitioner/company was engaged in the business of

manufacturing and bottling the products, such as fruit and vegetables,

fruit pulp, juices, squashes etc. and also manufacturing pickles, jam and

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other edible articles and had opened a current account in the said bank.

To the proposal of the petitioner/company for grant of cash credit limit

against the loan, the bank sanctioned the cash credit limit. The

petitioner/company deposited Rs.50,000/- with the bank on 04.07.1988

vide Fixed Deposit Receipt (FDR) No. 2132 and additional deposit of

Rs.50,000/- on 21.07.1988 vide FDR No. 2160. The bank sanctioned cash

credit limit of Rs.85,000/- in the name of petitioner No.1/company. The

petitioner Nos.2 and 3 who were the directors of the said company

executed promissory notes and agreed to pay interest at the rate of 12 per

cent per annum with quarterly rest. The petitioner Nos.1 to 3 submitted to

the bank that the sanctioned limit of Rs.85,000/- is inadequate for them

and they are in need of enhanced temporary limit for the period of one

year. A proposal was submitted to the bank. On scrutinizing the said

proposal, the then Chairman of the bank one Chandrabhan Sonarghare

sanctioned the enhanced limit of Rs.25,000/- in addition to the existing

limit. It is the case of the bank that the petitioners executed fresh demand

promissory notes against the enhanced limit of Rs.25,000/- and agreed to

pay the interest at the rate of 16.50 per cent per annum with quarterly rest.

It is further the case of the bank that the petitioners were permitted to

operate the cash credit limit of Rs.1,10,000/-. As per the scrutiny of the

bank accounts, the petitioners overdrew from time to time and

overdrawing of the petitioners was never within the sanctioned limit.

The financial condition of Nagpur Urban Cooperative Bank

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became extremely weak due to the mismanagement resulting in

appointment of an administrator over the bank, superseding sometime in

the year 1991. The Reserve Bank of India imposed restrictions on the

banking operation of the Nagpur Urban Cooperative Bank and ultimately

vide order dated 03.05.1993, the Commissioner of Cooperation, Pune, the

Nagpur Urban Cooperative Bank was amalgamated with the present

respondent i.e. Saraswat Cooperative Bank Limited. The amalgamation

was confirmed on 07.09.1993 and the entire assets and liabilities of the

Nagpur Urban Cooperative Bank were transferred to the present

respondent/Saraswat Cooperative Bank Limited . In view of these facts,

the respondent/Bank started recovery of the amounts due. Accordingly,

the petitioners were also approached and were called upon to liquidate the

amount of Rs. 2,75,551.70 found due inclusive of interest up to 30.09.1993.

The petitioners expressed their inability to liquidate the amount sought for

to be recovered from the respondent/Bank in lumpsum and informed the

respondent/Bank that the amount of proceeds of FDRs be adjusted to cash

credit account to reduce the dues. The respondent/Bank accordingly on

14.01.1994 adjusted the FDRs to the cash credit accounts and the dues

were reduced to Rs.1,67,134.50. The respondent/Bank then asked the

petitioners to liquidate the due amount or Rs. 1,67,134.50, but the

petitioners failed to do so. The respondent/Bank was constrained to issue

the notice through its Counsel calling upon the petitioners to pay the

amount of Rs.1,67,134.50 jointly and severally with an unapplied interest

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of Rs.41,266.75. Thus, totaling the amount of Rs.2,08,402.25 along with the

notice charges of Rs.400/- within stipulated period of ten days. In spite of

the notice issued to the petitioners, the petitioners failed to pay the dues

and forwarded their reply through the Counsel on 06.04.1995 denying the

claim of the respondent/Bank. The bank left with no choice but to file the

dispute before the learned Cooperative Court, Nagpur.

The learned Judge of the Cooperative Court by judgment and

order dated 18.02.2013 partly allowed the dispute and directed the

petitioners to repay an amount of Rs.1,67,498.60 with future interest at the

rate of 16.50 per cent per annum on the balance principal cash credit loan

of Rs.1,10,000/- from the date of the filing of dispute till its full realization.

Being aggrieved by the said judgment and order passed by the learned

Judge, Cooperative Court, the petitioners preferred an appeal before the

learned Member of the Maharashtra State Cooperative Appellate Court,

Bench at Nagpur. The learned Member partly allowed the appeal. The

learned Member of the appellate Court though maintained the order of

allowing the dispute, modified the order of the learned Judge of the

Cooperative Court to the extent of the interest. The learned Member,

appellate Court directed the petitioners to pay the outstanding amount of

Rs.1,67,498.60 with interest at the rate of Rs.12 per cent per annum from

the date of dispute till its full realization.

3. Shri Joshi, the learned Counsel for the petitioners vehemently

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submits that the orders challenged in the present petition namely the

judgment and award passed by the learned Judge of the Cooperative Court

and the judgment and order passed by the learned Member of the

Cooperative Court are unsustainable on more than one ground. Shri Joshi,

the learned Counsel submits that both the Courts below grossly erred in

appreciating the material placed before the Courts below in proper

perspective and only on assumption and presumption, the orders are

passed. The learned Counsel for the petitioners then vehemently submits

that both the Courts below failed to appreciate the oral evidence of the

witness of the respondent/Bank who in clear and unambiguous terms,

submitted before the Court that there was no material with the

respondent/Bank to show that the petitioners have availed any loan from

the bank or the bank provided any financial assistance to the petitioners.

Shri Joshi, the learned Counsel submits that on the contrary, it was the

consistent stand of the petitioners before the Courts below that the

petitioners availed the facility of the cash credit against the FDRs and this

fact was admitted by the witness of the bank. The learned Counsel for the

petitioner then submits that it was also the consistent stand of the

petitioners that the respondent/bank relied on the certain documents

namely the promissory notes executed by the petitioners; whereas the

petitioners submitted that no such promissory notes were executed by the

petitioners nor the petitioners submitted any document in the nature of

personal guarantee by the directors of the petitioner/company and it was

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specific stand of the petitioners that certain blank papers signed by the

petitioners were obtained by the bank and these documents were

misutilized to suit the purpose.

4. Shri Joshi, the learned Counsel also submits that though the

petitioners raised the point namely as there was no relationship between

the petitioners and the erstwhile bank namely Nagpur Urban Cooperative

Bank and as such the dispute itself was not tenable. The Courts below on

an erroneous assumption recorded the finding against the petitioners. The

learned Counsel then submits that both the Courts below also failed to

appreciate that the petitioners availed the cash credit facility against the

FDRs which were for a stipulated period and the petitioners offered the

encashment of these FDRs against the outstanding amount. The

respondent/Bank failed to encash the FDRs and on the contrary fixed the

exorbitant rate of interest for recovery of an alleged due against the

petitioners. Shri Joshi, the learned Counsel then submits that both the

Courts also failed to appreciate the factual aspect namely the petitioner

No.4 was neither a party to the transaction between the petitioner Nos.1 to

3 and the Nagpur Urban Cooperative Bank nor had any concern with the

cash credit facility availed against the FDRs even though the petitioner

No.4 was fastened with the liability and on this aspect itself. Hence, the

judgments and orders passed by both the Courts below are clearly

unsustainable. It is also the submission of Shri Joshi, the learned Counsel

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for the petitioners that there was absolutely no transaction by the

petitioners with the respondent/Bank after 21.07.1989 and in spite of these

facts, the dispute was filed fastening the liability on the petitioners for

alleged due amount on 30.09.1993. Shri Joshi also submits that the

respondent/Bank sought for the recovery of the amount from the

petitioners by applying varied rate of interest i.e. at some point of time, it

was 12 per cent and at some point of time it was 16 per cent. The learned

Counsel submits that such a fanciful rate of interest claimed by the

respondent/bank at its whims and wishes itself is an act of arbitrariness.

As such, it needs to be struck down.

5. Shri Joshi, the learned Counsel then submits that both the

Courts below also failed to consider that when the petitioners submitted

before the Courts below that there was no transaction with the

respondent/Bank after the year 1989 and the respondent/Bank failed to

produce any such material before the Courts below to show that there was

a transaction after the year 1989, the dispute thus was filed at a belated

stage and only to show that the cause of action arose to file the dispute on

04.01.1995, it was alleged that the bank was entitled to make the claim on

25.09.1993 and 14.01.1994 and the cause of action arose on 04.01.1995, the

dispute ought not to have been entertained being a time barred dispute.

The learned Counsel for the petitioner also places heavy reliance on the

Rule 45A of the Maharashtra Cooperative Societies Rules, 1961 to submit

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that the respondent/bank could not have clubbed the two accounts and

could not have sought recovery against the petitioner on an alleged loan

account against the FDRs of the petitioners. Shri Joshi, the learned

Counsel further submits that even the Courts below found that the

clubbing of the accounts by the bank was not proper, the Courts below

committed an error in allowing the dispute. Shri Joshi, the leaned Counsel

has invited my attention to the order passed by this Court on July 19, 2016,

which reads thus :-

"After hearing respective Counsel for the parties for some time, the facts on record indicate that the petitioners had invested Rs.50m,000/- in two separate fixed deposits and were issued two fixed deposit receipts. The said receipts were dated 4-7-1988 and 21-7-1988. The said fixed deposit receipts were to earn interest @ 10% per annum. In the reply filed on behalf of the respondent, it has been stated that as per the account statement at Exhibit-39, the proceeds of the aforesaid fixed deposit receipts were adjusted by crediting an amount of Rs.54,210.35 and Rs.54,213.85 on 30th September, 1993. Prima facie, the amount credited towards the realization of the aforesaid fixed deposit receipts appears to be on a lower side.

Time of two weeks is granted to the learned Counsel for the respondent to explain the manner in which the amount of interest has been calculated and credited."

Shri Joshi, the learned Counsel for the petitioners, in support of his

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submission places heavy reliance on the judgments of the Apex Court in

the cases of State of U.P. .v. Jogendra Singh (reported in AIR 1963 SC,

1618); Akalakunnam Village Service Cooperative Bank Limited and

another .v. Binu N. and others (reported in 2014(9) SCC, 294); Tulip Star

Hotels Limited .v. Special director of Enforcement (reported in 2014(5)

SCC, 162); Ishwar Dass Jain (dead) through LRs .v. Sohan Lal (dead) by

LRs (reported in AIR 2000 SC, 426); and the judgment of Gauhati High

Court in the case of Dharam Chand Joshi .v. Satya Narayan Bazaz

(reported in AIR 1993 Gauhati, 35).

6. Per contra, Shri Samel, the learned Counsel for the

respondent/Bank supports the judgments and orders impugned in the

present petition. He submits that there are concurrent findings recorded

on appreciation of the material by both the Courts below. As such, this

Court, while exercising the writ jurisdiction would be slow in appreciating

the evidence. The learned Counsel for the respondent/bank then submits

that the petitioners admitted that an amount was due against the

petitioners. Shri Samel, the learned Counsel then submits that the

petitioner No.2 tendered his evidence before the Courts below and

admitted the documents. As such, the petitioners now cannot challenge

this document before this Court. He further submits that though the

learned Judge of the Cooperative Court granted interest at the rate of 16

per cent per annum, the appellate Court reduced it to 12 per cent per

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annum. As such, the petitioners cannot take a stand of an exorbitant

interest awarded by the bank. Shri Samel, the learned Counsel then

submits that the petitioner No.2 himself submitted before the bank that he

is in need of enhancement in the cash credit limit and executed

promissory note against such an enhancement sought for and as such the

petitioners now cannot raise the ground of wrongful clubbing of the

accounts. He also submits that merely there were some statements in the

evidence of the bank employee, the same would not adversely affect the

case of the respondent/bank as the respondent/bank has placed on record

the photocopies of the ledgers. The learned Counsel for the respondent/

bank submits that this material was in the form of the reliable evidence

and a photocopy of the ledger is a reliable evidence than a certified copy

and the only requirement is that there must be a certificate of such

photocopy of the ledger and in the present matter, a certificate was issued

by the Branch Manager. Thus, the submission of Shri Samel is that the

document is placed on record by the respondent/Bank was clearly reliable

evidence.

7. Shri Samel, the learned Counsel then submits that in view of

the material placed on record, the petitioners could not have raised any

challenge to the recovery and at the most though not admitted but

assumed that the dispute could have been only on the aspect of the rate of

interest for the period from 1989 to 1994. Shri Samel, the learned Counsel

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then submits that accepting the submission of the petitioners would lead

to absolving the petitioners from the liability of the payment of the interest

over the amount due and payable from the petitioners and such a result

cannot be accepted as it would defeat the object of the banking business.

The learned Counsel further submits that after merger of the erstwhile

Nagpur Urban Cooperative Bank in the respondent/Bank, the respondent/

Bank called upon all the borrowers sought recovery of the amount due and

payable from the borrowers. Shri Samel, the learned Counsel then submits

that an erroneous reliance placed on the Rule 45A of the Maharashtra

Cooperative Societies Rules, 1961 as the same would not apply in the case

of the petitioners as the petitioners themselves permitted to club the

accounts. Thus, the learned Counsel for the respondent/bank prays for

dismissal of the petition. Shri Samel, the learned Counsel for the

respondent/bank, in support of his submission, places heavy reliance on

the judgments of the apex Court in the cases of Central Bank of India .v.

Ravindra and others (reported in 2002(1) SCC, 367); Krishnanand (dead)

through LRs and others .v. Deputy Director of Consolidation and others

(reported in 2015(1) SCC, 553) and the judgment of this Court in the case

of Central Bank of India, Bombay .v. Sion Bakers and Confectioners

Private Ltd., Bombay and others (reported in 2008(5) Mh.L.J., 772) and

the judgment of the Delhi High Court in the case of State Bank of India .v.

Krishna Embfastners (Pvt) Ltd. and others (reported in AIR 1998 Delhi,

6).

13 wp5987.15

8. Heard Shri R.P. Joshi, the learned Counsel appearing on behalf

of the petitioners and Shri M.D. Samel, the learned Counsel appearing on

behalf of the respondent/bank at length.

9. I have gone through the records of the lower Courts called for.

Though it is the submission of the learned Counsel for the respondent/

bank that as there are concurrent findings by both the Courts below, this

Court would be slow in exercising the writ jurisdiction. The ground raised

by the petitioners is of the failure of appreciation of the material and

evidence of the Courts below. This Court while exercising the writ

jurisdiction, may reappreicate the material and the evidence. Shri Joshi,

the learned Counsel for the petitioners was justified in placing reliance on

the judgment of the apex Court in the matter of Tulip Star Hotels

Limited .v. Special Director of Enforcement (cited supra). It would be useful

to refer the relevant observations of the apex Court, as under :-

"18. ... we have held that the original authority, the Appellate Tribunal as well as the Division Bench of the High Court failed to appreciate the issue in the proper perspective while holding the appellant guilty of the violation alleged. Therefore, none of the judgments relied upon by the respondents for the proposition that concurrent findings of fact should not be interfered with does not apply to the facts of this case."

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On the backdrop of the observations of the apex Court and in view of the

submissions of Shri Joshi, the learned Counsel for the petitioners that both

the Courts below failed to appreciate the matter in its proper perspective,

it may be necessary to refer certain material facts and evidence.

9. The respondent/bank filed the dispute before the learned

Judge of the Cooperative Court submitting that the petitioners had

approached the bank for financial assistance in the nature of loan and

submitted an application for grant of cash credit limit to the extent of

Rs.1,50,000/- for the period of one year and the bank offered to give

finance against security of fixed deposits and not against the finished and

semi finished goods produced by the opponents and the bank sanctioned

cash credit limit of Rs.85,000/-. The petitioners in their written statements

before the learned Judge of the Cooperative Court specifically submitted

before this Court that they were not the members of the said Nagpur

Urban Cooperative Bank and nor applied for any loan but the petitioners

only sought for assistance by way of cash credit limits against their FDRs.

It would be necessary to refer to the evidence of the witness of the

respondent/bank namely Shri Narsingh Yadav.

10. Perusal of the cross examination of this witness shows that in

the cross-examination the witness admits that all the proceeding books are

15 wp5987.15

not available with the respondent/Bank. This witness further admits that

to become a member and to obtain the loan being a member, the borrower

has to submit a form. This witness then admits that no such form of

membership is filed in the proceedings. He then states in the cross-

examination that the proceeding books were seized by Crime Investigation

Department (CID) and the seizure panchnama of the documents is not

placed on record. Then he admits that the petitioner/company had two

fixed deposits of Rs.50,000/- each and he could have availed 85 per cent

loan against these FDRs. The witness then clearly admits that as per the

Rules, the amount of loan must not exceed the amount of the fixed deposit

receipts. He also admits that the date of repayment of loan must be earlier

to the maturity date of the FDRs. This witness then admits that the Exh.32

i.e. the security pledge form is a printed form and the concerned officer

signs the form. He then states in the cross-examination that the form is

not signed by the concerned officer in his presence. This witness then

admits that at the relevant time the bank official used to obtain the

signatures on blank papers or blank forms. He also admits that as per the

prevailing Rules, if the opponent fails to repay the loan amount, the

amount could have been adjusted from his FDRs and after such an

adjustment, the loan account ought to have been closed. This witness

then admits that the petitioners by application dated 30.11.1988 sought the

enhanced overdraw of Rs.30,000/- and the respondent/bank sanctioned

the enhanced cash credit limit to the tune of Rs.25,000/- for one month.

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The sanction was dated 02.12.1988 and the petitioners were to repay the

said amount of 01.01.1989. This witness also admits that the petitioners on

23.01.1989 deposited Rs.5,000/- and Rs.10,000/- i.e. in total Rs.15,000/-

and on the very date i.e. 23.01.1989 the petitioners again deposited

Rs.10,000/-. Thus Rs.25,000/- were deposited on 23.01.1989. This witness

then admits that the petitioner No.3 was added party to the proceedings as

opponent No.3 being Director of the petitioner No.1/company. He admits

that the petitioner No.3 has not signed any of the documents and the

respondent/bank without obtaining consent from the petitioners, clubbed

the FDRs with the loan account. This witness then further admits that on

the loan accounts, the rate of interest varies i.e. some time it is 19 per cent,

20 per cent and 23 per cent. He then admits that the Nagpur Urban

Cooperative Bank closed its business in the year 1991 and it had stopped

the transactions from the year 1991.

11. Now, though these are the relevant admissions reflected in the

cross-examination of the witness, both the Courts below failed to consider

these admissions on an assumption that the petitioners have admitted the

documents. It may be also useful to refer the evidence of petitioner No.2.

Perusal of the evidence of the petitioner No.2 on an affidavit reveals that

the petitioner No.2 has stated that the opponent No.4 (i.e. petitioner No.4

herein Smt. Kusum Agrawal) has no relation with the company. The

opponent No.4 is not the shareholder. Then he states that the Manager of

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the erstwhile bank asked the petitioner Nos.2 and 3 to sign some blank

forms. Then he denies the statement in the dispute that the petitioners

were the members of the erstwhile bank. It is also stated that the bank has

not filed on record the statement of account operated by the petitioners up

to 16.03.1989 and the petitioners after obtaining those documents filed the

same on record. Further perusal of the evidence of the petitioner No.2

shows that the petitioner No.2 admits that he had submitted an

application before the bank on 25.07.2001. Then the documents are

referred namely Exhs. 34 and 45. He states that these documents are in

relation to the enhancement of the cash credit limit of Rs.25,000/- granted

by the bank in response to his application. This witness then admits the

signatures on the enhancement of the cash credit limit to the extent of

Rs.25,000/- and the documents being signed by himself and his daughter

i.e. petitioner No.3. The document namely Exh.31 named and styled as

"Promissory Note" is in respect of an amount of Rs.25,000/- carrying the

interest at the rate of 16.50 per cent. Exh.32 is the document under the title

"Continuing Security Letter" referring to promissory note of Rs.25,000/-

against hypothecation. Exh.33 is a printed format application. Exh.41 is a

document titled as "Hypothecation of Goods to Secure a Demand Cash

Credit". The amount is referred to as Rs.25,000/-, the date is referred to as

2nd day of December, 1988, the rate of interest is referred to as 16.50 per

cent per annum, the notice issued by the respondent/bank through their

Counsel dated 04.01.1995 is Exh.40 and the reply by the petitioners

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through their Counsel is at Exh.41.

12. As stated above, both the Courts below placed reliance on

these documents. By assuming the admission of the petitioners, it was a

specific stand of the petitioners that the petitioners had sought for

enhancement in the cash credit limit against the FDRs. It is the

submission of the bank that though the petitioners offered hypothecation

of the products as security, the bank refused the proposal. The said

documents thus are not properly appreciated by the Courts below and

thus the documents as well as the oral evidence of the witnesses is not

properly appreciated by the Courts below and the Courts below erred in

appreciation of this material documents and the evidence.

13. In view of this fact, I am unable to accept the submission of

Shri Samel, the learned Counsel for the respondent that as there are

concurrent findings of both the Courts below, this Court may not

reappreciate the consideration by the Courts below. On going through the

record, I find that Exh.30 is the application submitted by the petitioners. It

is stated that by way of the application, the petitioners sought the loan

against the fixed deposit receipts. These FDRs are of Rs.50,000/- each.

The FDRs bear Nos.2132 and 2160, the date of issuance is 04.07.1988 and

21.07.1988, the due date is 04.07.1988 and 21.07.1989 and the amount is

Rs.50,000/- each and rate of interest is ten per cent. Perusal of the said

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document further shows that the later part of the document reads for

office use only. Further it reveals that the loan of Rs.85,000/- against the

security of FDR rupees one lakh on 20.07.1988 at the rate of interest 12 per

cent. The next document Exh.40 again refers to the FDR Nos.2132 and

2160. The amount is referred to as rupees one lakh then it refers to the

amount allowable Rs.85,000/-, then it refers to the limit of Rs.85,000/- at

the rate of 12 per cent till 30.06.1989 recommended for sanction. Exh.32 is

a printed format. It only refers to place Nagpur dated 05.07.1988 and

signature and stamp. Rest of the print format referring to number, name,

address etc. is blank. Exh.34 is the application. Perusal of the said

document shows that it is an application submitted through Shri R.P.

Agrawal, Manager of the Nagpur Urban Cooperative Bank Limited. It is

stated in the said communication/letter/application that the company is

having the current account with the bank and the FDR for Rs.1,02,000/-

against which the petitioners are availing overdraw facility up to

Rs.85,000/- because of some immediate requirement, the petitioners are in

need of Rs.30,000/- temporarily for the period of one month. The

petitioners then requested for grant of sanction. The note of the officer of

the bank reads that Rs.25,000/- for the period of one month i.e. up to

31.12.1988 be granted as enhanced limit. Perusal of the record further

shows that the notice was issued to produce documents and the

endorsement reads that the original application for becoming the member

of Nagpur Urban Cooperative Bank is not found in the record.

20 wp5987.15

14. As stated above, subsequently it seems that the petitioners had

filed certain documents. Perusal of the material further shows that the

petitioners filed an application on 23.12.1994. It is stated that on

inspection of the accounts, the petitioners found that an exorbitant rate of

interest is calculated and it is further stated that the outstanding amount

shows against the petitioners ought to have been adjusted against the fixed

deposits as the FDRs were matured. The petitioners then prayed for

recalculation and revised statement of accounts. Exh.62 is the copy of

statement of account. Thus perusal of the above referred material clearly

shows that both the Courts below clearly failed to appreciate the material

in its proper perspective. Shri Joshi, the learned Counsel for the

petitioners has placed heavy reliance on Rule 45A of the Maharashtra

Cooperative societies rules, 1961 to submit that the respondent/bank

erroneously clubbed the accounts and as per sub Rule (2) of Rule 45A, in

case the depositor fails to repay the loan within the period for which it is

granted, the respondent/bank ought to have adjusted the fixed deposit

amount towards the repayment of the loan amount and the interest

thereon.

         "45A.           Limits on loans against fixed deposits


           (1)    When   a   society   makes   a   loan   to   a   depositor   on   the  

security of his fixed deposit with the society, the amount

21 wp5987.15

of loan shall not exceed 90 per cent of the deposit amount and the period for which the loan is granted shall not extent beyond the date of maturity of the fixed deposit.

(2) If the depositor does not repay the loan within the period for whichit is granted, the fixed deposit amount may be adjusted towards the repayment of the loan amount nd the interest thereon, and only the balance, if any, shall be paid by the society to the depositor on the date of maturity."

15. Though Shri Samel, the learned Counsel for the respondent/

bank makes an attempt to submit that the said Rule is of no help to the

petitioners as the petitioners were granted a term loan and the petitioners

are referring to this term loan as cash credit facility, I am unable to accept

the submission of Shri Samel for the reason that the respondent/bank

itself had filed a dispute before the learned Judge of the Cooperative Court.

Thus, invoking the provisions of the Maharashtra Cooperative Societies

Act, it is not in dispute that the erstwhile bank i.e. Nagpur Urban Bank was

a cooperative society. It was also the stand of the respondent/bank that

the petitioner/company was a member of the said society. Though the

respondent/bank could not place any material on record to that effect, in

such a situation, it cannot be expected that the Rule 45A of the

Maharashtra Cooperative Societies Rules is of no help to the petitioners.

Shri Joshi, the learned Counsel for the petitioners was justified in placing

22 wp5987.15

reliance on the said Rules and more particularly sub Rule (2) of Rule 45A.

16. Considering the material placed on record and considering the

evidence in the form of the documents and oral evidence, I find

considerable merit in the submission of Shri Joshi, the learned Counsel for

the petitioners. Both the Courts below erred in appreciating the material

and evidence and proceeded only on assumption and presumption. The

judgment and order passed by the learned Judge, Cooperative Court,

Nagpur as well as the judgment and order passed by the learned appellate

Court are clearly unsustainable.

17. In the result, the judgments and awards passed by the learned

Judge, Cooperative Court and the appellate Court are quashed and set

aside. Though the petitioners have prayed in the petition seeking direction

to refund the amount of Rs.14,800/- to the petitioners with interest at the

rate of 12 per cent per annum with annual compounding from August,

1989, in my opinion, such a prayer cannot be granted in the present

petition exercising the writ jurisdiction under Article 226 and 227 of the

Constitution of India. The petitioners may avail the other alternate

remedy, if so available to the petitioners for claim of such amount.

JUDGE

*rrg.